What
is Escrow?
The official
definition of "Disinterested Third Party Escrow" according to
the Escrow Association of Washington means any transaction wherein any
person or persons for the purpose of effecting and closing the sale, purchase,
exchange, transfer, encumbrance, or lease of real or personal property
to another person or persons, delivers any written instrument, money,
evidence of title to real or personal property or thing of value to a
third person to be held by such third person until the happening of a
specified event or other performance of a prescribed condition or conditions,
when it is then to be delivered by such third person, in compliance with
instructions under which he is to act, to a grantee, grantor, promise,
promisor, obligee, obligor, lessee, lessor, bailee, bailor, or any agent
or employee thereof.
In more
simple terms, escrow means:
- an arrangement
where an independent trusted third-party (the escrow company) receives
and disburses money and/or documents for two or more parties in a real
estate transaction, with the timing of such disbursement by the third-party
dependent on the performance by the parties of agreed-upon contractual
provisions.
- an account
established by a broker, under the provisions of license law, for the
purpose of holding funds on behalf of the broker's principal or some
other person until the consummation or termination of a real estate
transaction.
What
to Expect During Escrow
Buying
or refinancing a home? Here is what to expect from escrow.
TYPICAL
PURCHASE
1. Purchase
and Sale Agreement: is signed by all parties and delivered to Escrow
2. Preliminary
Title Report: is ordered from Title Company
3. Copies
of Title Report are sent to all parties along with letters of inquiry.
4. Payoff
Figures and any other information necessary to clear title are obtained
5. Loan
Documents from Buyers lender are received and reviewed *
6. Closing
Documents are prepared including a settlement statement
7. Individual
Appointments are made with Buyer and Seller
8. Loan
Documents are signed and returned to lender for funding approval*
9. Original
Deed and Deed of Trust are sent to County Recorder
10. Document(s)
are recorded
11. Funds
needed to close are received from lender and buyer
12. Funds
are disbursed to clear title, pay seller, and closing costs
13. Final
Closing Statement is mailed out
14. Reconveyance(s)
is recorded when received from party(s) paid off
15. Owners
Title Policy is mailed out
All Seller
financing would eliminate steps 5, 8, and 11. All Cash purchase would
eliminate steps 5 and 8, and eliminate the lender on 11.
TYPICAL
REFINANCE
1. Lender
or Mortgage Broker opens escrow
2. See
2 through 6 above
3. Appointment
is made with Borrower
4. Documents
are signed and returned to lender for approval
5. Original
Deed of Trust is sent to County Recorder
6. Document(s)
are recorded
7. Funds
needed to close are received from lender
8. See
9. Funds
are disbursed to clear title, pay seller, and closing costs
10. Final
Closing Statement is mailed out
11. Reconveyance(s)
is recorded when received from party(s) paid off
12. Owners
Title Policy is mailed out
Glossary of Common Escrow Terms
- Close
Date In the State of Washington the Close Date is traditionally
considered to transpire when documents are recorded.
- Closing
Documents Documents that are prepared
by Escrow from the information provided in writing by all parties to
the transaction, i.e., Closing Instructions.
- Closing
Statement A detailed individual itemization (cash accounting) of
the transaction prepared by Escrow and provided to all parties in the
transaction.
- County
Recorder/Auditor A county official who by State law is responsible
for the recording of all deeds and other instruments in writing which
by law are or may be filed for public record in the county.
- Deed
An instrument that is used to transfer title from one party to another.
i.e., Statutory Warranty Deed, Bargain and Sale Deed and other Deeds.
- Funding
Approval
The lender must approve the signed loan documents before documents are
recorded and funds are available.
- Funds
Disbursed Funds that are due parties to the transaction are disbursed.
i.e., payoff, seller proceeds, lender/mortgage broker fees, etc.
- Funds
Needed to Close Expenses of the sale or refinance which must be
paid in addition to the purchase price in the case of a buyer) or deducted
from the proceeds (in the case of a seller). The $ amount of the closing
costs is provided by Escrow when the appointment for signing is made.
- Individual
Appointments Appointments are made with the parties to the transaction,
buyer (borrower in Refi.) and seller to sign their appropriate documents.
Realtors and Loan Reps may accompany their clients. It is the custom
in Washington State to sign the parties separately.
- Letters
of Inquiry
Letters sent to Buyer and Seller by Escrow requesting specific information
pertinent to the transaction. i.e., seller would be asked if there is
a mortgage(s) on the property and who they are making those payments
to.
- Loan
Documents Documents that a Buyer/Borrower’s Lender requires too
secure their lien. i.e., Deed of Trust
- Owners
Title
Policy
A title insurance policy insuring the owner against loss due to any
defect of title not excepted to or excluded from the policy. It is delivered
to the owner of the property (on a purchase only) usually within 90
days after the transaction is closed.
- Payoff
Figures
These are obtained by Escrow from a lender that the seller (or borrower
in a refinance) has provided the information on. The
Preliminary Title would also show any liens of record.
- Preliminary
Title Report
A report created by a title company that lists all documents of public
record that have an effect upon title to the specified property.
- Purchase
and Sale Agreement Sometimes called an Earnest Money Agreement.
It is a legally binding Contract of sale and purchase of real estate
in Washington State. It is in this contract that the buyer and seller
come to final agreement on the terms of price, payment, prorations,
date of closing, and all other matters pertinent to the sale.
- Reconveyance
When an obligation secured by a Deed of Trust has been paid in full,
a Reconveyance is recorded to remove it from public record.
- Recorded
A document is considered recorded when the Recorders office enters it
into the public records.
All
About Escrow, Inc., is an independently owned and operated
escrow company licensed by the Washington State Department of Financial
Institutions. We serve all of Jefferson County, including the communities
of Port Townsend, Port Hadlock, Kala Point, Cape George, Port Ludlow,
Quilcene, and Brinnon. We also provide escrow services for closings throughout
Western Washington including Mason, Kitsap, and Clallam counties.
For
a smooth, seamless closing, give us a call.
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Susan
P. Monroe, President
2021 E. Sims Way
Port Townsend, WA 98368
Phone: 360-379-1516
Fax: 360-379-1410
E-Mail: susan@allaboutescrowinc.com
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